When President Donald Trump tweets, he moves markets. Last week’s upbeat comments on the possibility of a deal with China to call a halt to a trade war between the world’s two largest economies helped stock markets rally from the bloodbath of ‘Red October’.
By Friday, however, his officials were backpedalling, and not for the first time.
While it is rarely clear precisely what the US president wants from trade negotiations, apart from applying media spin to headlines, his belief that the size of America’s trade deficit means other countries are “cheating” is long-held, despite flying in the face of basic economics.
Given that the US trade deficit has surged to a seven-month high, his logic would dictate there is even more cheating going on. With anti-trade Democrats set to take seats in today’s elections to the House and Senate, Mr Trump will have yet more allies for his protectionist agenda.
This is a clear risk to Ireland, one of the world’s most open economies and a favoured place for US investment, which could yet find itself buffeted by a trade storm between the EU and the US if a temporary ceasefire struck in June does not hold. His target is Germany which, along with China and Japan, accounts for almost two-thirds of the US trade deficit.
Prior to June’s agreement, Mr Trump had threatened to keep the pressure on “until no Mercedes models rolled on Fifth Avenue in New York” and the deal struck with the EU also included pledges to import more US agricultural goods – a move that enraged France.
Given that he has now threatened to apply tariffs to everything America imports from China and has struck deals with Mexico and Canada as well as South Korea, re-opening that conflict with Europe would appear attractive, especially as there has been no progress in negotiations.
The administration is only bound by a pledge not to implement swingeing duties on car imports while the talks with the EU are going on.
And Brussels may be stoking Washington’s ire with a proposed digital tax on tech giants’ revenues, a move Treasury Secretary Steve Mnuchin has already termed “unilateral and unfair”.
Collateral damage does not seem to matter to Mr Trump very much.
In his attacks on German carmakers, for example, he ignored the fact that the largest single car exporting plant in the United States is BMW’s Spartanburg operation in South Carolina – it employs 9,000 people.
Mr Trump’s negotiating tactic is to keep ramping up the pressure, as he did with China, moving from $50bn of sanctions to $500bn-plus.
So no sector of industry is immune.
Any hit to chemicals and pharmaceuticals, which were high on the list of US tariffs imposed on China would be enormously damaging to Ireland, as they account for 60pc of exports to the US.
In addition to tariffs, the Trump administration’s trial and error approach to sanctions has had unforeseen consequences.
Blacklisting has emerged as a favourite tactic of the US Treasury with 1,000 additions to Washington’s list in 2017 – 30pc more than Mr Obama did in his last year in office, according to ‘The Economist Magazine’.
One unintended consequence was that 650 jobs at the Aughinish Alumina in Limerick have been placed in jeopardy by US sanctions on a Russian oligarch.
If there’s any good news, it is that Mr Trump settles cheaply.
Talks with Canada and Mexico that lasted almost 18 months changed little in the North American Free Trade Agreement apart from its name.
And in the Korean dispute, Mr Trump settled what he had termed “the worst deal ever” with Korea without tackling major issues in cars and agriculture.
The problem is that getting there causes a lot of real economic damage.
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